RBI Releases Framework for Retail Payments; Invites Applications from Companies
18, August, 2020
The Reserve Bank of India on Tuesday introduced the framework for setting up umbrella entities for operating Pan-India retail systems inviting all the eligible companies to apply by 26th February, 2021.
Companies with a net worth of Rs 500 Crore will be eligible to set up an umbrella entity which will also be permitted to set up, manage and operate new payments system in the retail space comprising Aadhar-based payments, remittance services, white label PoS and ATMs.
The umbrella entity will be permitted to operate the clearing and settlement systems for banks and non- banks; also manage and identify relevant skills such as settlement, credit, liquidity and preserve the integrity of the system.
RBI said that it will also be expected to monitor retail payment system developments in the country and other issues to avoid frauds that may adversely affect the system in general.
In case of FDIs in the applicant entity, it will have to fulfill the additional capital requirements applicable as under FEMA (Foreign Exchange Management Act) & necessary approvals from the competent authority.
The guidelines also include the ‘fit and proper’ requirements for promoters & promoter groups. The promoter groups should demonstrate the capital contribution of not less than 10 per cent — Rs 50 crore — at the time of making application for setting up the umbrella entity. Furthermore, the promoter group shareholding can be diluted to a minimum of 25 per cent after 5 years of commencement of business of the umbrella entity.
As per the guidelines, a minimum net worth of Rs 300 crore should be maintained at all times. The applications will be taken up for processing only after the deadline and RBI will endeavor to complete the process within a period of six months.
Applications will be undertaken by an External Advisory Committee (EAC) and Board for Regulation and Supervision of Payment and Settlement Systems (BPSS) will be the final authority on issuing authorization for setting up umbrella entity/entities.
